If a Company Uses the Indirect Method to Prepare the Statement

question 112

Multiple Choice

If a company uses the indirect method to prepare the statement of cash flows, how can depreciation be presented on the statement of cash flows?

• A)Depreciation expense can be added to net income in the financing activities section on the statement of cash flows.
• B)Depreciation expense can be subtracted from net income in the operating section on the statement of cash flows.
• C)Depreciation expense can be added to net income in the investing activities section on the statement of cash flows.
• D)Depreciation expense can be added to net income in the operating activities section on the statement of cash flows.

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Definitions:

Upper Tail

The portion of a distribution of values that lies above the upper limit of the central part of the distribution.

Area

A measure of the extent of a two-dimensional surface or shape, expressed in square units.

F-distribution

A probability distribution that arises in the testing of whether two population variances are equal.

Testing

The process of using statistical methods to determine if there is enough evidence to reject a given hypothesis about a data set.